Leading global stock exchanges have called on financial regulators to impose stricter oversight on the trading of “tokenised stocks,” warning that these digital assets pose serious risks to market integrity, investor protection, and regulatory compliance.
The push comes amid growing concern over platforms offering blockchain based tokens that mirror the performance of publicly traded shares, often without obtaining necessary licenses or meeting disclosure obligations required of traditional equity markets.
In a joint statement issued this week, representatives from major bourses, including the New York Stock Exchange (NYSE), London Stock Exchange (LSE), and Hong Kong Exchanges and Clearing (HKEX), argued that tokenised stocks are operating in a legal grey area, often evading the rigorous scrutiny applied to conventional securities.
“Tokenised equities attempt to replicate the value of listed securities without adhering to the same regulatory standards. This undermines investor trust and creates systemic risks,” the statement read.
Unlike regulated stock markets, these digital platforms may offer fractional ownership, round the clock trading, and access to international equities, all without being subject to the stringent regulatory regimes that govern traditional brokers and exchanges.
The exchanges are urging global regulators, including the US Securities and Exchange Commission (SEC), the European Securities and Markets Authority (ESMA), and the Financial Conduct Authority (FCA), to take coordinated action. They warn that if left unchecked, the rapid growth of tokenised stock offerings could lead to regulatory arbitrage, manipulation, and an erosion of confidence in financial markets.
Some token platforms argue that their services democratize access to investment, especially in regions with limited financial infrastructure. However, critics note that many of these platforms operate in jurisdictions with lax enforcement, making it difficult to hold them accountable when things go wrong.
Several enforcement actions have already begun. The SEC has previously filed lawsuits against companies offering unregistered tokenised securities, while other regulators have issued cease and desist orders.
Still, market watchdogs acknowledge the challenge of keeping pace with fast moving innovations in decentralized finance (DeFi) and tokenisation.
Industry analysts suggest the growing calls from established exchanges signal a looming regulatory crackdown and possibly a rethinking of how securities laws should evolve in the digital era.
“This is about creating a level playing field,” said Maria Thompson, a financial regulation expert at Global Markets Advisory. “If it walks like a stock and trades like a stock, it should be regulated like a stock.”
source: reuters.com